Lendlease’s focus on domestic work begins to pay off

After several years of losses, a strategy pivot by Australia-based builder and developer Lendlease appears to be paying off. 

On Monday, the firm reported a statutory profit of $48 million Australian dollars ($30.46 million) for its first half of fiscal year 2025, ending Dec. 31, 2024. For the same period a year prior, Lendlease had reported a statutory loss of AU$136 million.

In May 2024, Lendlease said it would pull out of international construction markets and reorganize its business to focus on Australian work. In a Monday earnings call, CEO Tony Lombardo said the shift has progressed on schedule.

“In less than nine months we’ve made strong progress simplifying the group, reducing its risk profile and recycling capital to be a more focused organization,” Lombardo said during the call. 

The firm substantially completed the divestment of its international construction operations during the H1 period, including the sale of its U.S. construction business. In September, Milford, Massachusetts-based Consigli Building Group announced it had finalized the purchase of substantial amounts of Lendlease’s U.S. portfolio.

The final sale price was undisclosed, but Consigli gained 45 current, under construction and pre-construction projects valued at over $1.8 billion. Additionally, 400 Lendlease employees, the majority of the firm’s U.S. workforce, transitioned to Consigli.

Then, in January — one day into its H2 period — Lendlease announced it had entered a binding agreement for the sale of its U.K. construction business to Greenwich, Connecticut-based private equity firm Atlas Holdings.

By the numbers

In the Monday report, construction revenue was down 18% for the period as Lendlease completed large projects in 2024, and various other projects took longer to come in, Lombardo said. 

In the last five years, Lombardo said that Lendlease’s construction earnings have been impacted negatively by supply chain issues, the COVID-19 pandemic and subcontractor insolvency. 

“While these headwinds continue into FY25, it is disappointing in the period to experience losses predominantly on two projects,” Lombardo said, adding that the two unnamed jobs were awarded in the 2020 to 2021 time frame and were fixed price. 

Those projects lost money as material costs soared, causing their costs to balloon, he said. But looking forward, Lombardo offered optimism, as the contractor has moved away from pursuing similar projects as part of its strategy shift. 

“We anticipate construction will return to profitability in the second half of FY25,” he said.